Health Care Issues

Mental Health Parity Doesn't Live Up To Claims

The federal "Mental Health Parity Act" which took effect this month is deceptively named and could backfire, claims columnist Jane Bryant Quinn.

  • Some employers will respond to the new federal law by reducing or eliminating mental-health coverage or making it harder to get treatment under their plans -- since law doesn't require them to provide mental-health coverage.

  • And although the maximum dollar payment for mental health must be the same as for other diseases -- under those employer plans that provide coverage -- treatment per year may be limited and copays may be higher.

  • Employers don't even have to offer equal lifetime dollar caps if it raises their health-insurance costs by one percent or more.

Some states have tougher mandates than the federal act, although those laws usually don't affect the biggest companies, which are self-insured and federally regulated. State-regulated group health plans must cover severe mental illness on a truly equal basis with physical illness in Colorado, Connecticut, Maryland, New Hampshire, Rhode Island and Vermont. And there's significant protection in Maine, Minnesota and Texas.

Source: Jane Bryant Quinn, "Mental Health Benefits Law Could Backfire," Washington Post, February 22, 1998.

How Expensive is Mental Health Coverage?

A new law taking effect January 1, 1998, will require employers who offer workers mental health insurance to provide the same limits on that coverage as those for physical ailments. While employers are not required to offer mental health insurance, this parity requirement has raised the question of just how expensive the mental health option would be. A new study by Rand Corporation economist Roland Sturm of 24 public-employer health plans concludes that the cost would be minimal.

  • Sturm found that removing the typical $25,000 yearly limit on mental health benefits would raise employers' group insurance costs by only about $1 per enrollee per year.

  • The most expensive changes he looked at would increase the employer's cost by no more than $7 per enrollee.

  • However, Sturm looked primarily at employers in the Midwest, and who were not in the private sector.

"The data are not necessarily representative for all industries or for other geographic regions in the country," he wrote.

Older studies had found that the costs would be four to eight times higher than Sturm's projections. Industry sources were cautious about the Rand study and said further research is necessary.

Source: Associated Press, "Mental Care Coverage Cost Little, Study Finds," New York Times, November 12, 1997.

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